The One Stock I'm Buying Today
Plus five more high-conviction stocks for your shopping list...
We breathing rare air in the market this week.
The S&P 500 closed down more than 1% the last two trading days. That was the first time since 1952 that happened during the Santa Rally, which happens during the last five trading days of the year. And if we close red today - which looks likely - it will be the first time ever the S&P 500 closed red the last four days of the year.
While that's obviously disappointing, it doesn't change the fact that 2024 has been a phenomenal year for the TikStocks Portfolio. As of today, the portfolio is up 45%, which is nearly double the S&P 500 return of +23%.
In addition, every time the index closed the year with three red days in a row, the SPX was +6% on average the following month.
That means if you're a long-term investor, now is an ideal time to add to quality positions.
But first, you need to know what you're getting yourself into.
Volatility Will Return in 2025
I'll be releasing my full list of 2025 predictions next week.
But one prediction at the top of my list is the return of market volatility.
The S&P 500 in 2023 and 2024 was famously tame. For instance, in 2024 the index will finish the year up 25% while experiencing only a -8.5% during the Yen Carry Trade panic in August:
We bought this dip with both hands and were vindicated a month later when the S&P 500 put in a new all-time high, netting my portfolio tens-of-thousands in profit in a short time frame.
However, I expect more, deeper pullbacks like this in 2025. Since 1980, the S&P 500 has averaged a -14% correction every year:
When those corrections will happen is impossible to tell. And my investing strategy does not involve trying to avoid every pullback, as you need to be right twice (once when you sell, and again when you re-buy your positions). During volatile periods, it's best to keep your head and take calculated bets, which is exactly what we did in August.
And if 2025 unfolds as I expect, we will have plenty more opportunities like this.
But while I expect 2025 to be much more volatile than the last few years, there will be plenty of opportunities if you know where to look.
We're in a "Stealth Pullback"
We're in the middle of a bigger pullback than you probably noticed.
Our portfolio construction - with heavy weightings toward large cap tech stocks and crypto - have masked the "stealth pullback" we're seeing in the market.
For instance, rate-sensitive sectors like real estate and materials are down -10% or more in the last 30 days. Energy has fared even worse, tanking -11% in the last month.
Just like over the last two years, you did fine if you owned the SPDR S&P 500 ETF (SPY) or Invesco QQQ Trust (QQQ). But if you're trying to generate massive gains - like the TikStocks Porfolio 45% gain in 2024 and 36% gain in 2023 - you need to use superior stock selection and portfolio management techniques.
That's why you need to be very "choosy" with which stocks you buy the dip on. And if I were buying the dip today, I'd focus on the following five stocks and ETFs.